A fresh approach to investments 

January 2, 2018

Inspired by attending an Entrepreneurs’ Forum Conference, John Dance plucked up the courage to create a new stockbroking business in 2010, naming it Vertem. Over the past eight years, he has grown it into a hugely successful – yet bespoke – investment business, but 2018 marks a new strategic direction for the firm as its looks to attract more North East-based private clients. He reveals more to North East Times…

Vertem is now in its eighth year and from a standing start, you’ve grown it to be a roaring success. Why the decision to now change direction? 

Vertem has so far achieved all that we hoped for and more. Gary Stockdale and I were fortunate that we had a lot of support from the independent financial adviser (IFA) market place when we launched in 2010 and this has built up tremendously to a point where our approach to investing clients’ money has been proven and funds under management have grown to well over £300m.

Although the IFA market has been our primary focus, we never intended to solely specialise in this area and do have some private clients. We are a North East business, yet unusually many of our clients are based across the UK.

We are not changing direction as much as wanting to introduce Vertem to the local investment market. We are and always have been stockbrokers. We believe our offering to the private client investor is unique and undoubtedly different. We genuinely believe that it will be of great interest to anyone who invests in markets or who is looking to diversify their investments away from the usual choices.

Have you managed to make any inroads into your ‘new’ market place? 

We have been looking after private clients and indeed some charity funds for quite some time. To reiterate, instead of a change in direction, Vertem is making a conscious decision to promote our unique offering further into the private client market. We will continue being a specialist to IFA Introducers, however, we know what we do is of great appeal to the private investor and we want to make the North East investment community aware of us and conscious that there is a serious and unique alternative in the region.

What makes Vertem different? 

Put simply, it’s the way we manage our clients’ money. We invested heavily in our own technology and processes from the beginning. Gary and I believed there was a way of identifying the right investment opportunities and building up portfolios with bright, original ideas that are a far cry from the preponderance of ‘model portfolios’ most of the larger houses now have to use. We employed talented, young graduates from the Northumbria University Finance course and trained them to work, think and research in our unique house style.

What makes Vertem attractive to the private investor? 

The savvy private investor is always on the lookout for the next ‘best’ idea, the stock others have missed, the undervalued situation that will provide growth and, yes, excitement. That’s what we do.

We scour the whole market. Size is of little relevance. What we are looking for is undervalued companies with strong growth potential. We use our robust investment process and specialist analysts to identify the opportunities that rarely even hit the radar screens of the big houses.

Don’t get me wrong, we are not a ‘small cap’ boutique, our methodology and process is proven across the scale – allowing us to also invest in large caps, funds, fixed interest and even derivatives.

Vertem appears to be about offering the private investor something they currently can’t get elsewhere – which begs the question, why not? 

Financial services really changed after the 2008 banking crisis. The regulator began to feel that private investors were not getting value for money, often advice was inconsistent, and some clients appeared to be treated differently to others.

This led the larger houses down the route of packaging investment portfolios into models that were compiled in research departments in London and sold by relationship managers across the country. Models became stereotyped, full of very similar stocks and shares.

Size alone became a factor, if the company was too small, the investment house is unable to buy enough shares to fill its portfolios, so only the larger companies and funds are considered.

The regulator may have been happier and compliance departments may have slept easier at night; however, fundamentally the client was being ignored. Now, the private client has begun to demand, once again, a proper service with skilled analysis and research seeking out great growth stocks that really make a portfolio motor. From an office in Jesmond, Vertem can provide that, and does so.

Can you give an example as to how this really benefits the client? 

In 1989, a Newcastle company called Sage floated on the Stock Market. A great many local investors bought shares in the company and over the years made quite exceptional returns. Sage was valued at £20 million when it floated; it is now valued at over £8 billion.

If a company of Sage’s initial size were to come to the market today, regardless of whether it’s a North East company, investors at the larger houses will not be buying any shares for their portfolios because it won’t be on their radar screens, for reasons of size if nothing else.

We do not consider that a service. If we, at Vertem, like the business and consider the shares to be of value, assessed by our usual analytical processes, then our clients, assuming it suits their risk profiles of course, will be able to invest.

So Vertem gives clients the option of both a discretionary and advisory service? 

Yes, we want to give our clients what they want. We do not dictate how their portfolios are managed and, frankly, if a client has a good idea we will research it for them as well. You never know, it may be an idea that we choose to follow up for other clients’ as well. We’re realistic enough to appreciate that we don’t have a monopoly on new ideas.

Why has it taken so long for Vertem to promote itself across the region? 

We were very lucky that we got off to a great start, winning business from IFAs and mainly via word of mouth which spread to many of their peers. The speed of that growth meant that we concentrated on servicing that new business correctly rather than marketing for more. We also had to ensure we didn’t tread on the toes of our introducers or compete for the same new business as them so the tone of our potential marketing had to be just right.

I asked Vinay Bedi, an ex-Wise Speke colleague of ours, to join in 2016 and help us develop the charity side of the business and we agreed that by focusing our private client marketing on stockbroking, our core strength, we had a viable plan for the future. Having had some success in winning charity portfolios and building a pipeline, going forward now is the most sensible time to launch and highlight our private client offering.

With Vertem now launching the promotion of its private client offering across the region, what are you looking to achieve? 

Continued powerful growth of the business is an obvious answer. In the past, I have used my involvement in racehorse ownership to promote the Vertem brand, but that can only go so far. I am determined that Vertem will become a well-known name in the region’s investment sector and I am certain we are capable of delivering the type of service I strongly feel has been badly neglected by investment managers elsewhere.

Initial signs of progress are hugely encouraging, and we look forward to a very strong 2018.


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